A newsletter that was actually pretty workmanlike, charting what it needed to chart and setting its market parameters as usual, ended a little weirdly as the writer had obviously not yet fully processed and resolved his feelings about the Fed Chairman and his brilliantly conceived operation whereby the Fed feeds favored economic areas (hello housing index) through long term bond purchases and sops up the money supply by selling short term bonds. The result is a painting, a representation of reality as dreamed up by an academic genius. This was the 'wrap up' segment to NFTRH196:
Bernanke: How You Like Me Now, Suckas?
Gold is twisting around and being restrained by policy. This policy makes it appear that the system is just fine. But this is just a painting, a fraud. A powerful entity is selling non-strategic T bonds to buy up strategic ones. It is painting the macro economic picture in a brilliantly despicable operation to keep previously popped bubbles like housing and current bubbles like government credit alive with no need as yet for outright printing. Markets, including the gold market, seem to buy it.
Basically, the Fed is controlling the financial markets and keeping the monetary barometer to financial stress and/or inflation ball and chained. And unless the market rebels the Fed can keep this racket going as long has it has enough bullets. Its bullets are measured in short-term treasury securities. They are finite.
I realize I am not doing a stellar job of brushing off this manipulation, but that is because blatant and damaging gamesmanship is not only practiced by the easy targets sitting in the executive suites of big investment banks, but also at the Federal Reserve, which works with these banks along with the US Treasury and the government itself to rig the markets that many of us would like to see more naturally functional.
If something needs this much hands on management, you have got to believe it is broken and the honest thing would be to just stop messing with it and let it break. But if that is allowed to happen, the whole enchilada unwraps and everyone gets messy. We know that rich and powerful entities do not want to cede power and it also appears that the public does not yet have the will - or perhaps the insight - just yet to take that power away by voting with its feet and just stopping its massive purchases of Treasury bonds, either directly or through its financial adviser herd.
No, the public has followed the Federal Reserve and large speculative entities right into the long bond, bringing its price to extreme levels. Ben Bernanke is a master, conducting an orchestra that could not be any more in tune. Everything is playing in harmony as deflation fears have been fomented toward an extreme, with the inflation anxiety of one year ago now a distant memory.
If you listen closely enough you might just hear Bernanke thinking aloud… "that'll be the last time you people publicly lynch me with your helicopter jokes and inflation hysteria; how you like me now suckas?"
I like him just fine as long as I can read him. Following Fed signals has become trickier in the last year and I have got to say that this Fed chief really is smart and he really is a challenge. But at the end of the day, he is still just a powerful clerk at the controls of a powerful entity with powerful people acting as his agents.
But reality is reality and fantasy is fantasy. I don't really care what gold itself does because it is just an anchor, a lump of monetary value storage. But as a newsletter writer I do care about being able to get a read on this mess. The chart above implies that the only read I will get is the read that Ben Bernanke says I will get until further notice.
BB: "How you like me now sucka?"
GT: "I like you just fine; I have no other choice right now. But 'I'll get you my